All perfect praise be to Allaah, The Lord of the Worlds. I testify that there is none worthy of worship except Allaah, and that Muhammad is His slave and Messenger.
Indeed, this Hadeeth is in fact reported by Al-Bukhari in "Al-Adab Al-Mufrad", and Shams Al-Haq Abaadi said about this narration while explaining “Sunnan Abi Daawood”: “Its chain of narrators include an unknown narrator” Also, Shaykh Al-Albaani classified this Hadeeth as Dha’eef [weak]. Moreover, there is no Saheeh [authentic] Hadeeth that states that circumcision for females is obligatory.
Ash-Shawkaani said: “The truth is that there is no evidence proving that it is an obligation, and what is certain is that female circumcision is only recommended and it is an obligation to abide by what is certain unless there is evidence that necessitates changing the ruling (i.e. from being recommended to being an obligation).”
For more benefit on the controversy among the scholars on circumcising the females and the most preponderant opinion on this issue and wisdom and importance of female circumcision, please refer to Fataawa 93047, 82042 and 81776.
However, its importance does not necessarily mean that it is an obligation because an obligation is a religious ruling that is not confirmed except with evidence.
Allaah Knows best.